Crude oil prices rallied by about 2% on Friday morning over mounting fears that it could take weeks to evacuate a stranded giant container ship blocking the Suez Canal.
Data retrieved from Lloyd’s List, a shipping data and news company revealed that the stranded mega-container ship is holding up an estimated $400 million an hour in trade, based on the estimated value of goods that are moved through the Suez Canal daily.
That being said, the black liquid hydrocarbon still heads for a third consecutive weekly decline on growing concerns of the third wave of the COVID-19 crisis.
At the time of writing this report, Brent crude rallied by 1.8%, to trade at $63.04 a barrel after losing about 4% on Thursday.
The major oil benchmark is on track for a moderate weekly loss, following a more than 6% drop in the past week.
Stephen Innes, Chief Global Market Strategist at Axi in a note to Nairametrics highlighted key macros that could weigh on oil prices in the midterm:
“The Suez Canal blockage’s transitory nature gave way to general nervousness around rising COVID -19 cases in Europe, India, and Brazil.
“And with an enduring safe- haven bid under the US dollar continuing to pressure oil prices, eventually, the trap door sprung and triggered a ferocious sell-off.
“And while sentiment was thrown an economic lifeline in the form of quickly repairing US job markets, it did provide a soft bed, but the bearish sentiment seemed to be winning out as the bounce was unconvincing.”
What to expect: Oil pundits anticipate that the reimposition of lockdowns in Europe would weigh more on oil prices as the resurgence of COVID-19 in hotspots worldwide does little to improve the prospect of regional travel and leisure sectors.